Mortgage Rates finally experienced their first noticeable move higher in 2012, although it should be noted that "noticeable" doesn't necessarily mean it was extreme.  Indeed, the 3.875% Best-Execution rate remains intact, and as has been the case for weeks, the day to day changes that we measure have been to the borrowing/closing costs associated with obtaining prevailing rates.  

Although bond markets, including MBS (the "mortgage backed securities" that most directly affect mortgage rates) are slightly weaker today (weaker: lower in price, higher in yield/rate), the ongoing effects of the tax cut extension are having an impact on the averages that we collate each day, as some lenders have had rather precipitous increases to fees well beyond what would be justified simply by movements in MBS.

Like yesterday, today was fairly quiet in terms of market movements.  It's just that the movement wasn't in our favor.  There were economic releases this morning, but none of them were responsible for the weakness in rates markets.  In fact, assigning responsibility is a bit challenging due to the unseen forces of corporate debt issuance and tradeflow considerations surrounding this week's Treasury auction cycle.  That's all just a fancy way of saying traders were trading based more on their position goals as opposed to economic events or news headlines. 

As we anticipated yesterday, volume increased today and stands a reasonable chance of doing the same tomorrow.   With no major AM data, the focal point for MBS Tomorrow's should be tomorrow's 10yr Treasury Auction--a much more relevant benchmark for MBS (in other words, if the auction goes very well or very poorly for 10yr Treasuries, MBS, and thus mortgage rates could be impacted as well).


  • 30YR FIXED -  3.875%, glimpses of 3.75% diminishing due to tax-cut-extension
  • FHA/VA -3.75%
  • 15 YEAR FIXED -  3.375%
  • 5 YEAR ARMS -  2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates and costs continue to operate near all time best levels
  • Current levels have experienced increasing resistance in improving much from here
  • There are technical reasons for that as well as fundamental reasons
  • Lenders tend to get busier when rates are in this "high 3's" level and can throttle their inbound volume by raising rates or costs.
  • While we don't necessarily think rates are destined to go higher, given the above facts, there seems to be more risk than reward regarding floating
  • But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn't always mean they're done improving.